第186期——2026年6月12日

It is great to be back as host on Biotech Hangout. Summer is in full swing here in New York City, a city swept up in New York Knicks basketball fever. Knicks in 6 is the call here.

In any case, we certainly had another busy week in the biotech industry. We're going to try to get through as much as we can with our jam-packed agenda, and I'm looking forward to having Eric, Paul, and Oliver chime in. To start off, as I often like to do as host, let's begin with a bird's-eye view of where things are in the biotech market. I'll speak on sector performance and then provide some initial commentary on capital-markets activity as well.

1. Biotech Holds Its Lead

At a high level, it's been a bit choppy of late, but I think things overall are still pretty healthy in biotech. Looking at performance year to date, biotech, with the XBI as a proxy, is still nicely in positive territory. As of yesterday's close, the XBI is up about 10.5% year to date. While the AI data-center chip trade, so to speak, has dominated as of late—and, of course, we have the huge SpaceX IPO taking place today, with, I believe, a modest $75 billion raise and now trading at over $2 trillion from a market-cap perspective—the NASDAQ is up 11.2% for the year, so it's only doing about 70 basis points better than biotech, or the XBI.

The XBI is outperforming the broader S&P 500 by about 350 basis points. Meanwhile, healthcare, more broadly speaking, is actually in the red so far year to date; it's down 0.4%. Within healthcare, biotech has been a clear winner, and, of course, we'd love to see this trend in biotech continue.

Let's take a look at some capital-markets activity. This week in biotech, we had the Parabilis Medicines IPO, raising a new record of $771 million in total. That surpasses the $719 million that obesity player Kailera Therapeutics raised less than 2 months ago.

Parabilis is an oncology-focused biotech with a proprietary Helicon peptide-based platform technology. I only first heard of Parabilis after it signed a collaboration deal with Regeneron to the tune of over $2 billion just last month. After looking into it just a little bit more this morning, I think it's incredible that this IPO for Parabilis comes just 5 months after the company raised $305 million in January of this year in a Series F financing. Congratulations to the Parabilis team on its great success there.

Then we have the IPO of Cardurion Therapeutics, which is a cardiovascular-disease-focused company. I believe that IPO is set to debut on the NASDAQ early next week. By midyear, we'll likely have had 12 or so companies IPO, raising collectively over $4 billion. Given this positivity, I'd like to think that the window for private companies to consider an IPO remains very open and that investor appetite is there. Obviously, though, it will depend on the type of story.

Just quickly on the private side, we saw a number of financings as well. I'll mention a few. We had a $125 million Series B for a company called Sonothera, which is focused on novel ultrasound-based gene therapies that address the issue of trying to get larger genes into a gene-therapy construct. Duchenne muscular dystrophy is a first target for that company.

Then we had a $100 million Series B for John Maraganore's City Therapeutics, an RNAi company for cardiovascular disease and ophthalmology. Lastly, we had an $11 million Series A for a company called Aethereal Bio, which is focused on antibodies for immune diseases.

We've had a number of public-market deals as well, and I think I'm going to have Eric take that one. But before we talk about public biotech financings that we've seen, I think Paul is on now, and Eric, maybe I'll ask this question to you both: Based on your conversations with companies and investors, do you want to offer your take on what we're seeing as it relates to private companies and the landscape for them?

I'm gonna go. No.

You go. All good, man. You got more interesting things to say, Paul.

There's 0% chance of that, Eric. I think you're totally right, Graig. There's still a window. All of us probably have a window into some sort of slice of a pipeline that could continue to test the markets later this year.

2. The IPO Window Stays Open

I still feel like the bar is higher than it's been historically. But at the end of the day, given how long the window was closed, I think there's still a backlog of private companies with real data in Phase 1/2-type studies or real technologies that have value. I think Josh Schimmer and I last year each guessed how many IPOs were going to be this year. A number of people who've listened to this podcast have reminded me that I think I guessed 12, so I was totally wrong. Josh Schimmer guessed 50, so we'll see. That would be pretty amazing, but it seems like the true answer might end up being at the midpoint.

I will say that, and I'd be curious, Eric, if you agree with this or not, we've talked on past podcasts about how last year was sort of the year of the launch story, and this year is the year of the shiny pipeline asset to some degree. I mean that less about, say, a RevMed comment and more just as a generality. It feels like large-cap companies that don't have an interesting pipeline asset are out of favor.

We've seen a number of development-stage biotech companies trade up 100% into data. I'm wondering if that's changing just a tiny bit. I have a couple of big binary events coming up in my coverage, and I feel like if those catalysts were reading out even 8 or 9 weeks ago, the perception from people would have been unequivocally that you could get compensated significantly for taking on that risk.

After a few readouts recently, some stocks traded sideways or traded down. Maybe there wasn't a financing when one was expected. I think there's a little bit more consternation among the buy side about whether investors need to play a little bit more defense going into the summer or the second half of this year. I don't think it's been a massive sea change, but I've definitely noticed that.

Like a true seller, I'm a little bit of a lagging indicator, reacting to the choppy markets. But on a forward-looking basis, it feels like the Street feels a little bit differently about catalysts and risk-rewards than people did a couple of months ago. Eric, do you hear the same thing at all?

I love your comment, Paul, about how this is the year of the shiny pipeline drug or candidate. I think you're dead right there. I think that's honestly what made Parabilis such an exciting IPO for a lot of people. They've got a drug that maybe, for the first time, can hit the Wnt pathway, which is implicated in so many different cancers. They've got some data. It's still Phase 1/2 data, but it could be, in theory, the next med, right? That's what people are looking for.

We also had, I'm sure we're going to discuss, the Tango data. The PRMT5 inhibitor class—Tango and others, for that matter—are in vogue these days for kind of the same reasons. I don't know. I haven't seen that end yet. I guess the natural progression is to go from launch in 2025 to shiny pipeline candidates in 2026 to platform stocks in 2027: science projects again.

Is that the end of a bull market there?

I think we all fear that, right? We don't want that. I think you're right also, Paul, that today's IPO window is a little bit of a Goldilocks scenario. It's selective, quality-driven, and data-oriented, but not closed. That's exactly the kind of market that we've always asked for.

Right. Makes sense.

Graig, do you have any thoughts?

You might be on mute, man.

Thanks so much. My visibility into private companies and their aspirations for IPOs comes from conversations with private companies. Some certainly are hopeful that they can get out this year. I think some of them have more real prospects than others.

Given how closed the IPO window has been for so many companies, I do think the cream rises to the top. By that, I mean companies with de-risked data and a good investor base. Based on where I sit relative to both your platforms, you probably have much better insight into things than I do.

At 12 by the midpoint of the year, I think we're in a good spot. Paul, I was on that same webcast when we were talking to Josh, and he had 50 while you had about 12. I chose the easy path and went last and said somewhere in between.

Again, I think the comments we made back then were that we just want to see a very functional biotech IPO market in 2026 that hopefully will lead to an open window for companies in 2027.

So, fingers crossed. For those of you listening, I hope you're doing the things that you can to get ready. For those of you who are perhaps not there just yet, let's keep an eye to 2027.

I think one other comment here, and it might segue into—if Oliver and Eric want to talk about the Insight deal—is that definitely the narrative for many private companies, and obviously this depends on the stage, right? It's more for companies that have some proof of concept. This is the whole dynamic of dual-tracking: doing an IPO or looking at whether or not there's a buyer of the company.

I think some people would say that's always been the case, but I don't have a good stat on this. It feels like over the past year there's been a lot more private M&A at a meaningful dollar level than I really ever remember.

Well, Paul, that's a great question. I wonder if you feel sometimes like I do that we in the public markets get the worst of the IPO class.

Yeah. We have seen Tubulis, which we know was gearing up to do a massive IPO. They got picked off. I think Orum was another one that was at least considering going public and got picked off. I don't know what Vega was doing, and that was the company that was just acquired this week by Insight.

It's a little bit concerning that you know pharma is looking at everything and that these private companies are looking at the dual-track process. Now, that's why to me something like Parabilis is so wonderful. Maybe Kailera and Maze fall in this boat here too. These are earlier IPOs from earlier in the year, but these are companies that were able to break through any valuation ceiling that pharma was willing to pay and create a lot of value for public market shareholders, despite maybe there having been a dual track. Who knows? I don't know, but I love your thoughts on that.

There, I was going to say a counterpoint to those, though, which was Metsera, I suppose, because if you look at the filing for Metsera before the listing, I think Novo put a bid in and then it ended up going. I think one of the things I've observed with the dynamic between IPOs, M&A, whether to sell before the IPO, the whole dual-track thing, is in the last couple years, because broadly speaking biotech capital markets have been shut down a lot, there's been a degree of desperation driving some of the private sales.

Whereas I think now we're seeing a different dynamic, where there's actual real competitive tension. The Incyte deal with Star to buy Vega, a subsidiary of Star, is a perfect example. Star was working on an IPO simultaneously with working on this deal. I think generally that's good for the sector, right? Because it creates real competitive tension in terms of giving the VCs optionality in what they want to do.

Well, Oliver, you're speaking from a VC mindset, which is, I agree, great for them. But those of us who operate in the public markets, we want all the good stuff for ourselves.

You're getting greedy. You're getting greedy. [laughter]

Well, let's—I mean, we'll eventually talk about the M&A that we've seen in the space. We did just comment on some financings we're seeing on the private side, but we've had some good datasets, which have come with some concomitant public biotech financings. Eric, I think I'll turn it over to you just to go through a few higher-profile ones that happened this past week.

3. Data Drives Public Financings

Yeah, there's maybe 1 interesting area here to discuss and debate, which was the Summit deal that didn't get done. But first, let's start with the 2 that did: a couple of very large offerings, 1 from Tango and 1 from IDEAYA. Just continuing the trajectory we've seen from earlier in the year, where companies that have data, especially good data—and I don't know, we'll probably talk about the Tango data either now or later in the podcast—but the data were exceptional.

Unprecedented results in PDAC, where pancreatic cancer is still a huge unmet need, and better data than we've ever seen before from any other drug combination. Hats off to the guys at Tango. They deserve to have been out there raising $500-plus million—$600 million—and they could put it to good use.

IDEAYA was able to raise on the heels of that same data set because they, too, were in the PRMT5 field and are beginning to generate probably similarly very interesting combination data. Again, a company that was able to raise several hundred million dollars on the heels of what looks like a terrific clinical result that's going to help a lot of patients.

The anomaly here was Summit, right? Summit, of course, had their data set last week at ASCO. I'm sure we talked about that on Biotech Hangout. I wasn't part of last week's episode, but the data were criticized from a few different angles. I actually thought they were very good.

Summit went public with a raise of about $500 million. Certainly, this company has a very substantial market cap. Certainly, as we've talked about, the environment for fundraising is very good. Certainly, this company can use the money. They don't have a particularly strong cash balance, and they've got a lot of things they can do with the money. They're running multiple Phase 3 studies.

All signs pointed to that offering being successful, and yet it was pulled. I assume there was a price at which the deal would have cleared. I assume that price was distasteful to the Summit management team, which, to their credit, remained huge owners of the security—huge shareholders. So they must have chosen to pull away when the price wasn't right.

I don't know what kind of advice they got or why they expected the price to be a lesser discount than, I guess, it was. But now they're seemingly a little bit stuck, right? Because the world knows that they're half-pregnant with the need to raise capital, and there is a pretty binary event coming from them toward year-end.

We sometimes see this happen. I'm sure you've seen it before, but I'd love your views on where this leaves Summit, or when companies go out and don't quite get the price point they want, what they ought to be doing.

Go ahead.

Go ahead.

No, you can go again.

I feel like it puts you in a really tough spot, right, Eric? It almost creates this self-fulfilling prophecy. If you're an investor looking to buy the stock, you're almost wondering if there's going to be a better entry point or a better liquidity event.

We've seen how concerns about how a stock might trade can transcend the actual fundamentals of the stock sometimes. Again, I don't cover Summit. I don't know anything about the transaction, but people can create a financing overhang into being a much bigger deal than it actually is. This feels like it would add fuel to that fire.

I don't know what you do. I'm not a banker. Do a royalty deal or rip the Band-Aid off and just do the financing anyway. Try to do a PIPE. I don't really know what else you can do, or just wait it out and roll into the catalyst, right?

Yeah, I'll just add that I don't cover Summit. I don't know the story well enough, but I was at ASCO. I was at the plenary session where they announced the data. Eric, I would agree that on the face of the data themselves, the data are good.

It would have been very interesting to see what would have happened to the stock if the follow-up presentation by a KOL who could opine on the data went very differently. For those who were maybe not familiar with what happened at ASCO, after the formal presentation, there was a U.S.-based KOL who was incredibly cautious around the data.

Again, for context, these data were from a Chinese study. They were very good data, as Eric referenced, but the criticisms were things like: “Hey, longer-term follow-up is needed to verify this. There's limited applicability to a U.S. patient population. We're going to need results of a global Phase 3. Because of this, I'm not really quite sure if the OS benefit will be maintained, because we just need a longer follow-up period.”

It was quite a destructive type of rebuttal of the data. I'm just curious whether the receptivity to that data would have been different at ASCO. It'd be curious to know if this company could have maybe much more easily raised $500 million, if not more.

I don't know what the next catalyst for this company is, so I don't know. Eric, you might be in a better position to know what the news flow is and whether there's another financeable event, but I do think it puts the company in a pretty tough spot.

No, I agree with your views. It's interesting to think about how many billions of dollars that discussion may have cost the company in terms of market value. Unfortunately, there's a third party here, Akeso, which ran the study and probably was responsible for communicating to ASCO and the discussant, and maybe helping her get to a better point.

I don't know where that communication fell apart, but I agree, it was a little bit disingenuous of her to prompt all those criticisms against a seemingly very good data set.

But yeah, we're left with what we have. The next data point is going to be the HARMONi-3 study. This is the global study that everyone's been waiting for. You referenced just that, Graig. The data are coming at year-end, and it's going to be binary.

I think the company wanted to put another $500 million or so in its coffers because it's now running multiple Phase 3 studies in other indications, including nonsquamous lung cancer and colorectal cancer. These studies are going to read out in 2027 and beyond. If this HARMONi-3 study at year-end doesn't go their way, they're going to have to raise a lot of capital to fund these ongoing Phase 3s, probably at a lower valuation. So, it's not ideal from a strategic standpoint.

Yeah. I think I'll just comment, too, having had the benefit of doing business development at 2 rather large companies: It's really important for smaller companies to be able to raise money not only to fund their trials, keep the lights on, and keep the staff employed, but also because having cash is a very important strategic asset, especially as you're negotiating with potentially interested partners.

I'm not saying that, in the Summit case, that was a main consideration, but generally speaking, when you see companies raise money, it is obviously to capture some meaningful value inflection and hopefully to extend the cash runway. But many times, too, which is often unsaid, it's really just to be able to have a substantive cash position so that when you're talking to strategics, they aren't there saying, “Well, we know you're not in a good position from a cash perspective, and so we'll dictate terms.”

Usually, if you're the smaller company with ample cash, you can use that as leverage to say something to the degree of, “You know what? Thanks for your interest. We're good on cash. We don't need you. We'll just continue on, and if you want to reengage under better terms, we'll have that conversation.”

I've got my fingers crossed for all biotech companies. Without knowing specifically the Summit story, I hope the data for them from HARMONi-3 are positive. Can I ask a question, guys? I'd be interested—I don't know if any of you cover Tango. They've got this trial that's a combination with Revolution Medicines' pancreatic drug, right? I'd be interested to know how much Tango is seen as somewhat of a threat to the possible end market for the Revolution Medicines drug. It's super interesting.

Eric, do you want to comment? I think you cover Tango.

Yeah. For those who are maybe a little bit less aware, the data this week showed that Tango's drug, called TNG462, is a PRMT5 inhibitor. The mutations called MTAP deletions that enable a PRMT5 inhibitor to work are found in about 40% or so of pancreatic cancer patients. So, it's a minority of the market, though a large minority, that the TNG462 drug is directed toward.

All the data that we've seen—well, I shouldn't say all the data; the exciting data that we've seen—is in combination with the Revolution Medicines RAS inhibitor. The most exciting is the combination of daraxonrasib, the multi-RAS inhibitor from Revolution Medicines, with TNG462. That's the data that showed a 90-plus percent response rate, a response that is off the charts and that I don't think anyone would have fathomed days ago, let alone months or years ago. That is just a tremendous result in a cancer where we're used to seeing response rates in the teens or 20s at best.

In terms of the competitive dynamic with Revolution Medicines, it's interesting, right? Revolution Medicines clearly is in the lead with regard to its RAS inhibitors. Daraxonrasib should be approved, I'd hope, almost any day now. As soon as they file it, it should be turned around and ratified, and they're clearly going to have a leadership position in this market.

But there are some other multi-RAS inhibitors in development that, in theory, could be combinable with the PRMT5 class—namely, compounds from AstraZeneca, Astellas, Novartis, and Roche, I believe—so we'll see how this plays out. Obviously, in this case, 1 plus 1 equals 3, and that, in theory, could make for some kind of collaborative or cooperative relationship between Tango and Revolution Medicines.

I'm told the companies have a very good working relationship, and hopefully that will continue. Hopefully, there will be financial incentives for them to continue to work together, because that would be the fastest route to get this combination to patients. There's no doubt that if Tango were to go with any of the other RAS inhibitors, they'd have to take a bit of a pause and restart some development.

Their path forward right now is with daraxonrasib. They're talking about a frontline combination study, and that probably means both companies are going to benefit from longer duration on therapy and joint, combined sales. But I don't know if anyone else has views on this.

I don't know much about the Tango story. I do follow the PRMT5 inhibitor space along with you, Eric, but that is incredible data. I also have exposure to the pancreatic cancer space.

From a high-level perspective, without talking too much about the specifics of Tango plus Revolution Medicines, for all of us who've been covering the biopharmaceutical industry for the past 20 years, the advances we're seeing in pancreatic cancer are breathtaking. So, congratulations to all the companies that are working on this. It's just great to see this kind of data for patients.

4. Big Pharma Makes Bigger Bets

All right. With that said, we did reference a couple of deals that we would discuss today. There are 3 in particular that we're going to talk about, but there are also a number of partnership deals. Let's start by talking about 2 smaller deals first, and then we'll shift to a pretty sizable deal that we saw this week, and that's GlaxoSmithKline buying Nuvalent.

On the first deal, which we referenced earlier, with Incyte making a splash and buying Star Therapeutics' subsidiary Vega Therapeutics for $2 billion or so in total consideration, Oliver, did you want to lead that, or Eric, did you want to talk about that?

Sure. I can run everyone through the facts of it. In a way, there's a bit of a line you can draw between the Incyte deal and the GSK deal from my very macro, not-in-the-weeds perspective, which is basically new CEOs.

With Incyte, about a year ago, Bill Meury, who's probably pretty well known to the whole VC biotech community, took over as chief executive. He was the chief executive who sold Karuna to BMS, then went to the Blackstone Life Sciences company Anthos, which ended up selling to Novartis. So, he's one of those classic veteran executives, often involved in a lot of deals.

The market perceived his new seat at Incyte as a clear indication that Incyte was going to start doing bigger bolt-on M&A. To date, they focused on business-development deals, like sub-$1 billion. So, this deal for Star, or Star's subsidiary Vega Therapeutics, is basically the same thing. It's up to $2 billion: $1.25 billion upfront in cash and then a further $750 million down the line.

Incyte's main drug is Jakafi, right? It's a JAK drug for blood cancer. What they've basically bought with Star—or with Vega Therapeutics, the subsidiary of Star—is this drug, VGA039, which is a treatment for von Willebrand disease, a common inherited blood disorder. A kind of version of hemophilia is the best way of thinking about it, and it's in Phase 3 trials. It could benefit from an accelerated approval process.

Effectively, right now, the standard of care for von Willebrand disease is a several-times-a-week infusion. This means that the only patients who are ever treated with it tend to be those with the most severe cases—right, a few tens of thousands. What this new Vega drug offers is basically a monthly infusion.

There's a possibility of converting those patients who are doing the multiple-times-a-week infusion and also using it for prophylactic reasons, for prevention. What Incyte effectively sees is potentially a kind of blockbuster drug. I've discussed this a bit on Biotech Hangout before, which is that when you think about a blockbuster drug, the $100 billion-market-cap companies in big pharma are tending to go after multiblockbuster drugs, right? Because that's what they need to fill the hole in their revenues that comes from patent cliffs.

For Incyte, with Jakafi coming off patent as early as 2028, getting high hundreds of millions of dollars in revenue, toward $1 billion in revenue, is a big deal. That's why we often see these midsize drugmakers hunting for these smaller biotech targets increasingly nowadays.

Fascinating.

I don't know if anyone else wants to chip in.

I just want to say shout-out to Dave Gardner, who I'm sure multiple people on this know, who went to industry. We've seen a lot of times people from Wall Street go to industry in certain strategy roles and hope to maybe be more active, or maybe get sort of—I don't know, I'm generalizing—but maybe get a little bit hamstrung by the politics and impediments to actually doing deals and things like that.

And it's cool to see Incyte transacting on a private company that was generating a good deal of buzz in the investment community and seems pretty interesting.

Yeah. To add to that, it wasn't just creating buzz. The process was competitive; I think there may have been other bidders around it. Second, they were thinking about an IPO process, right?

I suppose with Dave and Bill, the new CEO, this shows the appetite that Incyte has to go and do deals. I spoke to Bill after the deal was announced, and what he was basically saying was, “You should consider us as the first of several,” right? I imagine they're going to look—hematology is a natural area for them, but they could also look in ophthalmology and oncology. There are obvious adjacencies.

They're not going to do everything, and it generally is probably going to cap out at a few billion dollars, but there are clear adjacencies that they could push into. I think the market has actually responded pretty well to them. The stock's up over the past year, like 50%.

Yeah. Anyone who knows Dave and certainly Bill knows they're not wallflowers. These guys are going to be active. Congrats. This is the first somewhat larger deal, at least, that we've seen from the new team.

I have a lot of confidence in this team and its ability to do diligence and hopefully find some good assets.

Eric, did you want to mention the J&J–Firefly deal?

You know, I think we've talked a lot about private transactions already. This is another one of similar size and ilk. Maybe the thing that's most interesting to me here, Graig, is that the lead asset J&J is acquiring from Firefly is again a RAS inhibitor.

This is a pathway that's drawing a lot of attention, including from new oncology players like J&J. If you look forward to future M&A and business-development transactions, especially focusing on oncology, there's probably no pathway that's more ripe for deals, acquisitions, and collaborations than RAS inhibition right now.

The thing's on fire, and as we just talked about a few minutes ago, we're seeing better and better clinical results from combinations and all sorts of other players in the field. So, welcome, J&J. I'm sure they won't be the last.

Yeah. And I think it's interesting, too, that I wasn't familiar with Firefly before, but that being said, it's got a degrader-based platform technology, and we just saw a whole host of deals in the degrader space, which we'll mention in a little bit. But you marry degraders and RAS inhibition and pancreatic cancer, and I'm sure Firefly was like, “I think we're at the right place at the right time.” So, congratulations to the Firefly team.

Sure. I was all over it, but not just because of the English accent and GSK being a U.K. pharmaceutical company, although it's cool to see them do stuff.

Funnily, I was talking with someone after the deal was announced, and they were saying that, when you run the numbers—

On the number of deals they've done, I think GSK comes out as number 4. Number 1 would be Eli Lilly, and then I can't remember who goes after that. It's maybe Merck, then there's one more, and then GSK comes out as 4th.

Most of the deals they've done in the past few years have been small. They've done, you know, like 35Pharma[?], which was a billion-odd-dollar deal. I think one of those is private and one is public. They did Boston Pharmaceuticals[?], too.

But on the whole, the thing that's striking about this for GSK is its size and, in a sense, its ambition in oncology. Let's trace the story back to 2014. GSK did this slightly wacky deal under Andrew Witty where they got out of oncology. They did an asset swap with Novartis, took Novartis's vaccines division—which has helped them build a pretty successful vaccines enterprise—and got rid of their oncology division.

Then Andrew Witty left and Emma Walmsley came in. She spent quite a lot of time getting GSK back into oncology, right? Luke Miels, who was the CCO—the chief commercial officer—for much of that period and is now CEO of GSK as of the beginning of this year, has effectively taken their biggest swing yet in getting them back into oncology.

Nuvalent has several drugs targeting different mutations of non-small cell lung cancer, as I understand it, both of which could get approvals this year. Both are in quite competitive spaces, so there are other drugs that have been commercialized or are going to be commercialized in those areas.

Recently, at ASCO, one of those 2 drugs got some new frontline data, which was perceived by investors as a bit of a setback for Nuvalent. Broadly speaking, I think Nuvalent hasn't really had that many inflection points of late, and it's one of those classic biotechs that has just been sitting there as it approaches its PDUFA dates, waiting for someone to come and buy it.

It's an interesting deal for GSK. Setting aside the asset swap, it's basically their largest deal ever since the company was created at the beginning of the millennium. That's a big thing for a new CEO who's just 6 months into the job, and I'm sure he's telegraphing to the market that this is something we can probably imagine is going to continue.

The reason I think it's an interesting deal—and after it was announced, I spoke to people and got the perspective of some of the bankers and investors—is that I think it's quite smart in a way. They paid $124 a share, which put Nuvalent's equity value at $10-something billion. Its enterprise value, because of the cash on the balance sheet, was around $9.4 billion.

The reason it's a reasonably smart deal is that there's a huge variance in where people—and where analysts—think peak sales lands, because of how competitive the landscape is for these drugs. The most bearish take on Nuvalent is that peak sales land at around $2 billion. The most bullish take puts it at maybe $5–6 billion across its pipeline.

If it lands at $2 billion, that's not great, and they've probably overpaid, but it's not a total disaster. Whereas, if it lands on the more bullish side, it actually ends up being a very good deal for Luke Miels. I think that's the bet.

It's an arbitrage on a company that a lot of other large-cap pharma companies may have passed on, and GSK saw a pretty unique opportunity to take a big swing in oncology. That's where they've done a bunch of their deals recently, including Sierra Oncology. They also did a big collaboration with Hengrui, which included a partnership on several early-stage cancer drugs.

It makes sense. I think it surprised the market, but it makes sense. I'd be interested in your opinions. Maybe I'll just add that it is surprising that GSK is number 4 on that list of companies.

I need to verify this list, by the way. But, yeah—

I don't think that's the impression people get. But if the stats are the stats and the numbers are the numbers, I'm not in a position to opine on where GSK's needs are.

That being said, it is interesting to see how that company has evolved over the past 2 decades or so. Are you in? Are you out? If you remember, they brought in Hal Barron some time ago, and then he left. Obviously, there was a big movement to upgrade the R&D organization, and then I think there was some transition. But here we are again. Certainly a big, bold move by GSK.

I don't know, Paul or Eric—any comments you might have?

The only thing I would comment on is their role in oncology, or their place in oncology. As Oliver said, they got out of the business very vocally in 2014, but just a few years later—I think it was 2018 or 2019—they bought Tesaro.

And then, a few years after that, in the early 2020s, they bought Sierra Oncology. Then there was another deal just last year, IDRx. So they've kind of been dabbling with smaller oncology deals for the last 10 years after expressly stating they're not in oncology.

I guess with Nuvalent, they're fully in, right? You can't do a $10 billion transaction and not be in oncology. We'll see how this plays out, but the Tesaro deal didn't work out for them. The Sierra deal was a much smaller transaction. IDRx was development-stage. They probably need more in oncology if they're going to be a real player.

We have a lot to get through, and we're probably not going to get through all of it.

But Graig, can I ask Oliver about this leakage?

5. M&A Leaks Follow Human Nature

Yeah, definitely go there as well. I think there's some controversy out there about M&A getting leaked and what the motivations are, but Oliver, you're in the thick of things. Do you want to opine for a couple of minutes there?

Sure. I think it's kind of like how the sausage is made, or whatever. I've been following biotech for a few years now, and I cover deals across sectors. I see the dynamics and how they work—media leaks in industrials, oil and gas, not just in biotech. In biotech, I think you tend to see more of them, and sometimes more interest in them.

I've often chalked that up to a couple of things: a lot of retail investors follow the space, right? M&A tends to happen at quite a high premium, so there are lots of incentives to work out how to read the tea leaves on what's going on with M&A and the chatter and gossip in the market. I'm on X, or Twitter, all the time, right? I see the excitement—sometimes misfounded—that a lot of the retail investor community in biotech has over certain M&A leaks.

There are a lot of publications where you read what they publish, and it's nonsense. They have no verification process; they just publish what they hear. But because they may have a 1-in-10 or 2-in-10 hit rate, people still pay a bit of attention to them. Obviously, I'm not talking about the FT, the Journal, or Bloomberg. I'm talking about other, random ones. They're generally not worth your time.

It's interesting, right? Most people, particularly VCs and executives at companies, tend to assume that there's a strategic logic to a lot of the leaks. On the whole, there isn't really. Sometimes deal reporting and putting something out can put companies in play, help get a deal over the line, or make it a more competitive process. That does occasionally happen, and sometimes, in my role, I can end up being a conduit for that—whatever strategic leak—but on the whole, it's much more to do with the reporters. It's to do with me, the relationships I have, who I spend time with, and the fact that I spend a lot of time in biotech.

Generally, I kind of like biotech as a type of M&A because it's one of those areas where I'm not an expert, but I can see the chess moves now. Without any inside information, I can see the chess moves of what certain companies would and wouldn't do, in a way that's slightly murkier with other industries.

We were just talking about the GSK–Nuvalent deal, for instance. The idea that a new CEO, freshly empowered to do deals at a company that's been spending quite a lot of its business-development dollars on oncology, would take a big swing at an oncology company isn't that surprising. On the flip side, you look at Nuvalent and you're like, oh, a company that's had most of its inflection points with regard to data, is awaiting 2 PDUFA dates, and is about to launch—which is the sweet spot for all biopharma acquisitions, right? Large-cap pharma groups are often better at the launch process than biotechs. It makes a lot of sense that they would want to sell, right?

A lot of the work that I do is clue work, in a way, and that's not totally dissimilar, I think, to a lot of the advisers. People who are inside a deal and working on a deal, and people who are outside a deal, want to work out what's going on in the industry. Deal reporters play a role in that, right? We're trying to ambulance-chase a bit and work out what's going on here. People are hearing chatter about this company.

My health warning for whoever's listening from the retail investment community is this: there are publications to pay attention to when they report on M&A, whether it's described as early stage or it's happening tomorrow or in a few days. And then there are other publications not to pay attention to, because I know a lot of my peers, and I know the ones who have very rigorous checks and balances about when they publish something. We would never publish something unless we absolutely know it to be the case, and that tends to differ at other places.

I'm not talking about Bloomberg and the Journal. They're also A1. They would publish stuff only when they know it's the case. But I just know that in biotech there's a lot of attention paid to these slightly random publications, and maybe I would encourage people to pay slightly less attention to them. I don't know if I'm putting shade on people. [laughter]

It's always fascinating to hear the rumors, whether they're true or not, and then see the deals get announced when they do, and see the sources. As always, we appreciate high-quality work like the work that you do, Oliver. Thanks for that fascinating perspective.

Oliver, I know we're running tight, but this trend that we're seeing, where companies, or maybe board members, or even investment banks, are leaking information the night before a transaction: frequently, we'll wake up and see something on Sunday night that says DLX[?] is going to get done, and we wake up Monday morning and it's on the tape. Obviously, this has been signed, sealed, and negotiated for days on end. What's the point of leaking something less than 24 hours before an announcement? How do you guys feel about that?

I mean, for the average investor, it has way less value, doesn't it? It's simple. For example, last year we broke the Novartis–Avidity deal when they were in talks. I think the deal printed in October, and I think we broke that they were in talks in August or something like that. For your arbitrage hedge fund, that kind of information has more value, right? It's something that gives them a long lead time, and they can ask, “Do I trust this reporter? Does this make sense?”

With regard to the stuff that comes the night before, sometimes companies have a complex deal that they want to make sure the market really understands. Working with someone and explaining that can be a good way of setting out their stall. But on the whole, as I said, most of these things don't have a strategic logic to them. It's more to do with me or my peers, the energy we put toward things, and trying to work them out.

Generally, if you want a simple answer, it's this: the closer you get to a deal being announced, the more people know about it, so the more likely it's going to get out there, right? If we think about GSK–Nuvalent, I don't know when the talks kicked off, but whenever they did, the likelihood that anyone who had a sliver of that information was going to talk about it two months ago, when it was probably still in a delicate position, is absolutely zero.

Once things are hours or days away from getting signed, and there's more confidence about it and more people know about it, just like basic human nature, people tend to be a little bit more loose-lipped about it. But most of the time, there's no strategy to it. It's really just the energy and persistence of my peers or myself in trying to dig this information out.

6. Biotech Shifts From Deals To Data

Thanks, Oliver, for that. Again, we've probably got a few more minutes left. I just want to comment on 3 deals that we saw this past week that were more BD transactions—partnerships or licensing deals.

Novartis renewed and expanded its collaboration with private company Orionis Biosciences, which has a molecular glue-based platform, for up to $1.4 billion in biobucks, as I like to call them. We also saw Eli Lilly in-license a gamma-secretase modulator candidate for Alzheimer's for $1 billion-plus in biobucks, but, interestingly, only a $10 million upfront payment. That was from a Swedish biotech company called AlzeCure Pharma.

Lastly, in a much smaller deal in terms of the financials involved, San Francisco-based Corvus Pharmaceuticals participated in an investment in its Chinese biotech or pharmaceutical partner, Angel Pharmaceuticals, which is actually a company that Corvus specifically helped to create to help develop its drugs in China.

But this was for further funding for Soquelitinib, which is a novel ITK inhibitor for both oncology and immune disorders. Let’s talk about some data sets. In particular, I know Paul wanted to talk about some Novartis news with one of their candidates in FSHD. Paul, can you summarize?

Actually, maybe Eric, you want to kick it off? You covered Avidity, and I just think there’s an interesting conversation with FSHD and DM1—a number of these indications and how we should be thinking about the bottom line. But you were the Avidity expert. Really, just quick, because I know you want to get to the fun stuff.

Yeah, interesting data coming out of Novartis are from a phase 1/2 study, but they have been calling it a pivotal study, or at least a potentially pivotal study. What they showed in FSHD, a rare muscle disease, is that you can essentially hit the target. The target is DUX4, and their biomarkers are turned on by DUX4 activation. DUX4 is a transcription factor, and one of the biomarkers, KHDC1L—I butchered that name, I’m sorry—is a blood-borne biomarker that was reduced, as you would have expected it to be. They also showed some reductions in creatine kinase, a biomarker of muscle destruction.

The data look good, and I think what you’re going to get, Paul, is that if these data were still in the hands of Avidity, they would have taken them to the FDA and probably aggressively tried to go for accelerated approval. There was a quote in the Novartis press release saying that they’re going to have a conversation with regulatory authorities, but obviously Novartis is pulling back a little bit from that gas pedal and maybe being a little less aggressive than a smaller company with a lot more riding on this might be.

Yeah. I cover a small handful of these genetic-medicine companies where there’s a trade or an investment thesis around regulatory flexibility. There’s been a lot of reporting, or anecdotes from companies, that in light of Marks leaving, the FDA has been meeting with people in the space and has been receptive to trying to get back on track with flexibility. Obviously, the dynamic of flexibility is super-duper subjective—what that actually means—but I guess I don’t know how you feel.

I’m hopeful that, obviously, Avidity didn’t have a setback in the past year, but some of the rare-disease companies that have had setbacks on the regulatory side might still get their day in court and may get kind of a replay-like situation. Maybe it’ll take until we have a permanent FDA head or permanent leadership in place, but it feels like the scale is tilting back. I don’t know—I thought the Avidity data seemed pretty convincing. The drug is doing something, wouldn’t you think?

I agree. There’s a huge unmet need here. This drug should be approved, in my opinion. I hope they can bring it over the goal line. But other than being someone optimistic like you, Paul, we still lack some data points at the FDA to see how things are going.

Totally.

We’ve got a few minutes left, but Paul, I know you had some interesting things you wanted to talk about in terms of the gene-therapy landscape. Maybe as we look to wrap this up, I’ll have you talk about 2 news items of the week.

7. Gene Therapy Faces Its Next Test

Yeah, sure. Neurogene earlier this week announced that they completed dosing in their pivotal study for NGN-401. It’s a gene-replacement therapy for Rett syndrome, which is this terrible neurodevelopmental disease. It’s important news for 2 reasons. One is that, in their phase 1/2 study at a higher dose, they had a severe inflammatory event that ended up in a patient death. I think there had been this lingering question as to whether or not this was a risk at the lower dose in their pivotal study.

As it turns out, the study is not over—they’ll still be following these patients—but the perception is that if these events happen, they would happen early, and they didn’t. That’s very encouraging. They overenrolled the study. Neurogene is one of 2 companies in this space developing AAV9-based therapies for this, and both will have pivotal data next year. This will be another test, assuming these studies work—or, I guess, if these studies work—of regulatory flexibility. Both companies have sign-off on these single-arm studies looking at developmental milestones.

And then, Graig, you pointed out that Sensorion is discontinuing the otoferlin program in light of Regeneron getting to market first and giving it away for free. There’s a very interesting conversation in the gene-therapy space in hearing. We had a lot more buzz here about 5 years ago. There was Akouos, Decibel, and I’m sure there’s still tremendous potential, and people much smarter than me will figure it out.

We’ve had this success in otoferlin deficiency, where these drugs are amazing, right? Patients potentially don’t need cochlear implants. One thing that one of the CEOs of these companies said to me, that I’d forgotten, is that otoferlin is the first, most obvious target because it’s one of the only genetic conditions of hearing loss where all of the inner-ear biology is preserved at birth. There’s the potential to rescue the pathology by simply delivering the gene, whereas in others there are in utero changes in the ear and in how these cells might communicate with each other. As a result, the window for intervention might not be as wide. It’s a space to monitor. It’s unfortunate for Sensorion, and they have another program that looks interesting but might be higher risk.

Yeah, I think this space is fascinating. There are lots of different gene-therapy approaches. It’s great insight you have on this particular mechanism and why it makes the most sense.

I just think it’s interesting that Sensorion, which probably spent a fair amount of time and resources developing something where clearly there’s an unmet medical need, just decided to give up, given that someone beat them to the punch and was going to give it away for free. That’s a great service by Regeneron, but I guess that’s how quickly the business environment can move.

Let’s just hope there are still going to be plenty of good options for patients who unfortunately go deaf, whether it’s congenital or just from some trauma. I thought it was a very interesting development.